No changes are expected to the opening combination against the Black Caps but KL Rahul's unavailability due to personal reasons opens up a slot for Kishan.
The former India batter player, who led the Indian team in 99 Tests and 334 ODIs, also advocated separate captaincy for each format in international cricket.
Shaw, who recently smashed a triple century against Assam, has not been included in the Test squad but has earned a long-overdue inclusion in the shortest format.
X factor is dropped, mediocrity is retained: Venkatesh Prasad unhappy over Kishan's exclusion in India-Sri Lanka ODI
World's number one T20 batter Suryakumar Yadav is likely to sit out of the first ODI with Shreyas Iyer being the preferred choice.
Hooda moved up 40 places to 97th after his unbeaten 41 off 23 balls while Kishan was rewarded for his brisk 37-run knock at the top of the order.
Kishan, who has played 10 ODIs since making his debut last year, is only the fourth Indian batsman to score a 50-over double ton after Rohit, Tendulkar and Sehwag.
Dhawan has batted with a dated approach which is proving to be detrimental for India during the powerplay overs. Shubman Gill or Ishan Kishan are more innovative in this day and age of T20s.
Kishan smashed the fastest double-hundred in ODIs, becoming the fourth Indian to achieve the landmark. Kohli scored his 72nd century in international cricket to surpass Ricky Ponting's record.
With four fifties and a ton in his last six ODI innings, Iyer is in the form of his life.
India came from behind to square the three-match ODI series against South Africa 1-1.
Gill, who made his ODI comeback with the series against the West Indies, was a treat to the eye during his innings comprising 15 fours and a six.
Not having Virat Kohli, Rohit Sharma and Jasprit Bumrah due to workload management, followed by KL Rahul's injury, the 2-2 scoreline was sort of a moral victory for Team India.
A T20I series decider between two top sides on a Sunday. It was all primed to be the perfect weekend entertainment with a packed atmosphere at the M Chinnaswamy Stadium in Bengaluru.
Ishan Kishan aggregating 164 runs in three matches including two half-centuries, has made a massive jump to enter the top 10 among T20 batters.
Yuzvendra Chahal (3/20) and Harshal Patel (4/25) led the way with the ball after sizzling half-centuries from Ruturaj Gaikwad (57) and Ishan Kishan (54) powered India to 179 for five.
The Indian team management looks at Ishan Kishan as a specialist opener, knowing that he isn't the one blessed with a power game to negotiate the variations during back-end of T20I games.
While Ishan Kishan (48) and Dewald Brevis (37) kept MI in the hunt, it was Tim David's 11-ball 34-run cameo that brought the five-time champions back into the chase.
Ishan Kishan agreed that price-tag pressure does play on one's mind for a first few days but his Team Indian seniors have specifically told him not to fret too much on the issue.
Kishan, who was bought by the five-time champions for Rs 15.25 crore, started well but soon suffered a slump in form and has so far failed to justify his price-tag.
Rohit Sharma, who could not open his account against CSK on Thursday night, has managed only 114 runs from seven innings this season.